How to Talk About Fees with Your Financial Planning Clients

As a financial planner, you and your clients discuss the deeply personal, financial intimacies of things like: debt, prenuptial agreements, bankruptcy, alimony and child support, embarrassing financial indiscretions and failed deals, aging parents and “money-pit” children, retirement, and planning for death. If a financial planner can talk about these sensitive financial topics with their clients, why do they get so squirrely when it comes to talking about client fees—an essential topic that often just gets cursorily glossed over or buried under the rug altogether. This happens often because the financial planner feels like it’s his or her job to be talking about making money for the client, not spending it. The focus of financial planning services should be all about helping the client, not funding the financial planner. Moreover, clients tend to see you as a personal confidant—a financial therapist of sorts—as opposed to a professional with a profitable business to run and ultimately grow.

Dealing with fees and client billing can often be representative of the uncomfortable intersection of the business of being a financial planner and the personal services nature of the relationship you build with your clients. Without fees, however, you’re nothing but a very helpful volunteer. You need to get paid—after all, this is your livelihood- and you must get fairly compensated for the value of your services and time.

Keep in mind your clients are probably just as uneasy about talking about fees as you are. Below are four tips for navigating the fee conversation with your clients and getting the fees you deserve.

Don’t Procrastinate; Be Upfront, Consistent, and Clear with Your Clients

Discuss your fee structure at your first client meeting, as well as each subsequent meeting. While you obviously may not want to start talking fees the second your client comes in your office, plan ahead about when, during the meeting, you will have the fee talk and then actually follow through on your plan.

Be clear and concise. Discuss your fees using language your clients can understand. Cover the details, but don’t ramble or give unnecessarily long, technical responses—they can come across as insincere and the trees can get lost in the forest. Adjust your language to your client’s educational and professional understanding of the topics—don’t use complex industry terms just to sound impressive, but, at the same time, avoid dumbing things down so much that it becomes patronizing. Be specific, don’t use ballpark figures or estimates and talk about things in more relatable terms, such as actual dollars, rather than basis points.

Get It in Writing

You wouldn’t advise your client to make a financial deal without first getting the terms and fees of the relationship in writing. Heed your own advice and make sure you put your client fee schedule in writing. Not only will this prevent future disagreements or surprises about fees, but also this written document provides transparency to help build trust with your clients and show your professionalism.

Your written fee structure should be comprehensive, but free from complicated, confusing language, ambiguities and small print. To emphasize the value of your services, include a comprehensive list of all the services covered by your fee schedule.

Highlight the Value of your Services; Be Prepared to Explain Your Value Proposition

Many clients will initially balk upon first seeing your fee schedule—even if it’s completely reasonable or below the industry average.

Don’t get defensive if your client questions your fees. Stand by what you have assigned as the value of your professional services. Combat client skepticism by painting a clear, realistic picture of what exactly the intangible service of financial planning is actually intended to provide and why it’s financially worthwhile for a client to pay for a financial planner.

Another effective strategy is to remind your clients of the specific services you have provided them through the course of your relationship. Be prepared to articulate specific examples that show why your financial planning services have been vital to helping your client achieve their financial goals.

Anticipate Your Clients Asking Why You’re Worth More than a Robo-Advisor; Be Prepared to Explain Why

Anticipate your clients questioning your fee schedule, when they could use a lower cost robo-advisor (the online automated wealth management and portfolio investment services that are currently popular).

Emphasize to your clients that the biggest, most valuable service you can offer them over a robo-advisor is the human element. Since your clients will likely need more than just investment management services (i.e., asset selection, asset allocation, rebalancing, and etc.), highlight to your clients the value that comes from having a trained professional make them a choreographed financial plan and then help them carry it out, checking in on them along the way and making necessary adjustments. The most dangerous assassin to a client’s financial health is the client themselves. You’re here to protect your clients from mistakes by removing the tumultuous, emotional element out of investing and guiding them, every step of the way, to make smart, well-informed financial decisions.

A conduit to greater success—here at Summit Brokerage, we are in the business of helping you grow your practice. We know keeping your clients happy must be your first priority and that’s why we are dedicated to providing you with all the tools and support you need to do so. If you’re an advisor who aspires to the highest levels of professional achievement and success, don’t miss out our dedicated financial solutions and resources to facilitate your business growth.

This blog and website are for informational, educational and discussion purposes only, and the owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. Summit Brokerage Services, Inc., Summit Financial Group Inc., and any of their affiliated entities and principals are not a law firms or an accounting firms, or substitutes for an attorney or accountant. Although topics may be discussed on this blog that may involve legal, accounting, or investment issues, nothing on this blog shall be deemed to constitute the practice of law, legal advice, investment advice, and/or tax advice. Summit Brokerage Services, Inc., and its affiliates do not, and cannot provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defenses, options, selection of forms or strategies. The content on this blog is “as is” and carries no warranties. You should consult an experienced professional regarding tax consequences of specific transactions.

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